Warburg discloses CDS hedging activity


UBS Warburg has taken the unprecedented step of disclosing the extent to which it uses credit derivatives to protect against losses from bad loans. In the bank’s annual report for 2001 it revealed it had hedged one third of its total €60 billion loan portfolio.

Analysts say the bank’s use of credit derivatives is one of the reasons that it posted profits of €1.96 billion, when the poor economic environment and several high-profile bankruptcies have hit other banks. A spokesperson for the bank

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